Banks’ interest income spikes on improved loan book, higher yields
by BALA AUGIE
September 8, 2017 | 1:59 am| | | Start Conversation
Nigerian Banks’ interest incomes have surged in the second quarter of the year thanks to improved yield on the loan book and the yield on money market instrument.
Strong liquidity position also enabled some lenders optimise their earnings from Fixed Income Securities.
The cumulative interest income of the 13 lenders that have released Half Year 2017 results spiked by 34.15 percent to N1.41 trillion in June 2017.
Guaranty Trust Bank’s interest income spiked by 51.12 percent to N165.88 billion in the period under review while Zenith Bank’s interest income increased by 45.13 percent to N262.25 billion.
United Bank for Africa (UBA)’s, Access Bank’s and First Bank Holdings Plc’s interest income increased by 44.15 percent, 44.24 percent and 37.23 percent to N154.95 billion, N161.90 billion and N232.37 billion respectively.
Nearly all Tier 2 lenders or mid-sized banks recorded stellar performance as some of them posted improved net interest margins (NIM).
Stanbic IBTC Holdings interest income surged by 80.15 percent to N41.03 billion as at June 2017 while Diamond Bank, Fidelity, First City monument Bank (FCMB) and Unity Bank recorded a 31.27 percent, 28.15 percent, 3 percent, and 32.11 percent increase in interest income respectively.
However, Wema Bank’s interest income dipped 43.12 percent to N25.45 billion in June 2017 while Sterling was flat at N50.02 billion.
Earlier in the month the central bank had raised N256 billion in six month treasuries at a higher yield of 18 percent as it seeks to woo foreign investors who had jettisoned naira assets due to uncertainties surrounding foreign exchange policy.
The Impressive profit of most of the lenders especially the large ones was largely driven by optimisation of the balance sheet asset yield, efficient deposit mix with resultant low cost of funds coupled with effective Cost to Income Ratio (CIR).
The cumulative net income of 13 lenders under our coverage rose by 26 percent to N332.08 billion in the period under review from N263.05 billion as at June 2016.
Some analysts have attributed the impressive performance of most banks to the introduction of the Investors’ and
Exporters’ window by the central bank and the subsequent modernization of the foreign exchange market.
Bank stocks have rallied since the introduction of the new policy.
Bank shares have gained 93.05 percent since the start of the year, outperforming Nigeria Stock Exchange All Share Index (ASI).
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